A total of 67 per cent, two thirds of pension professionals, have stated that the Department for Work and Pensions’ defined benefit white paper will leave members of DB pension schemes better protected in the future.
According to a survey conducted by Aon of 140 pension professionals, two thirds noted that DB schemes will be better protected with the introduction of the white paper’s proposals including the new DB chair’s statement and additional powers for The Pensions Regulator.
Aon partner Lynda Whitney commented: “The responses to the survey on our webinar gave a clear indication that the pensions industry hopes that changes proposed in the white paper will provide better protection to schemes in the medium- and long-term.”
The survey, which questioned trustees, pension managers and finance staff with pension responsibilities also found that 44 per cent were in favour of a new funding code that is either a bit or a lot more prescriptive.
In contrast, 14 per cent wanted the funding code to be a bit loess or a lot less prescriptive. Of these, 7 per cent said they wanted the funding code to be a lot more prescriptive. This indicates a “conclusive rejection of Minimum Funding Requirement II,” Whitney said.
“I believe that trustees are looking for a little more prescription along with clearer guidelines, ranges and examples - but still retaining the ability to reflect scheme and company specific circumstances. They want more certainty about when they will get support from TPR if they reject an employer’s funding proposal.”
Furthermore, in the short-term, survey respondents noted that this year’s annual funding statement from TPR would not have a significant impact, with 57 per cent stating that the pension scheme’s share, compared to other stakeholders, would remain unchanged. However, 42 per cent were hopeful that a pension scheme could get a larger share in a 2018 valuation. A further 41 per cent thought that they would only get a slightly larger share.
Nonetheless, Whitney noted that while many of the proposals have gained industry support, many of the amendments can only be implemented with legislation, which could take up to three years.